The US Securities and Exchange Commission (SEC) has made an important policy shift by entering the personnel accounting bulletin (SAB) 122 to replace the highly criticized SAB 121.
According to an update of January 23, this development will solve regulatory challenges that have previously hindered the cryptody sector.
SAB 121
SAB 121, introduced under former SEC chairman Gary Gender, required companies that offer crypto -guardianship services to classify customer assets as obligations on their balance.
This step was criticized for creating unnecessary complexity and the deterrent of banks and financial institutions to enter the crypto guardianship market. The policy was generally seen as a roadblock for the broader acceptance of digital assets services.
At the time, the efforts to withdraw SAB 121 were given two -part support, but were faced with setbacks. Despite the passing of both rooms of the congress, former President Joe Biden was the withdrawal proposal Veto, and a subsequent attempt to ignore the veto was not successful.
SAB 122
The new SAB 122 effectively approves these controversial provisions and offers a more accommodating framework.
Financial institutions can now adhere to the established standards of the Financial Accounting Standards Board (FASB) or other international accounting guidelines.
The SEC also emphasized the importance of transparency and insisted on companies to offer disclosures that help investors understand how crypto is considered on behalf of others, is protected.
According to the bulletin:
“An entity that has the obligation to protect crypto-assets for others must determine whether he should acknowledge liability with regard to the risk of loss according to such an obligation, and, if so, the measurement of such liability, by the recognition – and to apply measurement requirements for liabilities arising from unforeseen circumstances in the accounting standards of Financial Accounting Standards Board Codification. “
This policy shift, introduced under President Donald Trump and acting SEC chairman Mark Uyeda, is a remarkable pivot point for promoting a more supporting regulation environment for digital assets.
Community welcomes movement
The introduction of SAB 122 was welcomed by supervisors and the stakeholders of the crypto industry.
SEC Commissioner Hester Peirce, a long-term advocate for balanced crypto regulation, expressed its approval and reflects the lighting that was felt in the sector.
American legislators have also praised the move. Huis Financial Services Committee Chairman French Hill described the previous SAB 121 rule as synchronous with standard financial practices, while Senator Cynthia Lummis emphasized his adverse impact on innovation and banking.
Crypto leaders have noted that the removal of SAB 121 will probably influence how companies explain and reveal their retention obligations.
Michael Saylor from MicroStrategy noted that this shift enables banks to offer Bitcoin guardianship while navigating through more simple compliance requirements.
He wrote:
“SAB 121 has been withdrawn, making benches Bitcoin capable of.”